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on Efficiency and Productivity |
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Issue of 2020‒07‒13
eight papers chosen by |
| By: | Boehm, Johannes; Oberfield, Ezra |
| Abstract: | The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distorted in states with weaker enforcement. Specifically, we document that in industries that tend to rely more heavily on relationship-specific intermediate inputs, plants in states with more congested courts shift their expenditures away from intermediate inputs and have a greater vertical span of production. To quantify the impact of these distortions on aggregate productivity, we construct a model in which plants have several ways of producing, each with different bundles of inputs. Weak enforcement exacerbates a holdup problem that arises when using inputs that require customization, distorting both the intensive and extensive margins of input use. The equilibrium organization of production and the network structure of input-output linkages arise endogenously from the producers' simultaneous cost minimization decisions. We identify the structural parameters that govern enforcement frictions from cross-state variation in the first moments of producers' cost shares. A set of counterfactuals show that enforcement frictions lower aggregate productivity to an extent that is relevant on the macro scale. |
| JEL: | E32 F12 O11 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14482&r=all |
| By: | Douglas L. Campbell (New Economic School); Karsten Mau (Maastricht University) |
| Abstract: | Bloom, Draca, and Van Reenen (2016) find that Chinese import competition induced a rise in patenting, IT adoption, and TFP by up to 30% of the total increase in Europe in the late 1990s and early 2000s. We uncover several coding errors in an important robustness check of their patent results. When corrected, we find no statistically significant relationship between Chinese competition and patents. Other specifications in the original paper use a problematic log(1 + patents) transformation. This normalization induces bias given low average patent counts for firms in China-competing sectors, and rapidly declining patents across the sample. |
| Keywords: | Patents, China, Europe, Textiles, Trade Shocks, Manufacturing |
| JEL: | F14 F13 L25 L60 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:abo:neswpt:w0264&r=all |
| By: | Sabrina Auci (University of Palermo, Department of Political Science and International Relations); Andrea Pronti (University of Ferrara, Department of Economics and Management) |
| Abstract: | This paper aims to analyse how the farmer’s choice on adopting innovative and sustainable irrigation systems such as water conservation and saving technologies (WCSTs), induced also by the climatic variability, would shape the economic resilience of the Italian agricultural farms by improving land productivity. A proper water management would increase efficiency in the agricultural activities by improving the use of water endowments and rising agricultural economic performances to address a sustainable development. We used an endogenous switching regression model considering two sources of endogeneity: the selection indicator and a continuous endogenous explanatory variable. By applying the control function method, a correlated random effects probit model for the selection equation and a correlated random effects model for the outcome equation are estimated in a panel data context based on a detailed micro-level dataset of all the Italian farms. Our results confirm that adopting WCSTs increases land productivity of adopters significantly. |
| Keywords: | Water scarcity, Innovation, Micro irrigation, Sustainable agriculture, Italian farms |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:1220&r=all |
| By: | Jules Gazeaud; Victor Stephane |
| Abstract: | Despite the popularity of public works programs in developing countries, there is virtually no evidence on the value of the infrastructure they generate. This paper attempts to start filling this gap in the context of the PSNP – a largescale program implemented in Ethiopia since 2005. Under the program, millions of beneficiaries received social transfers conditional on their participation in activities such as land improvements and soil and water conservation measures. We examine the value of these activities using a satellite-based indicator of agricultural productivity and difference-in-differences estimates. The result is a disappointing precise zero, meaning there is no discernible effect of the program on agricultural productivity. This contrasts with existing narratives and calls for a more attentive examination of the benefits typically attributed to public works. |
| Keywords: | Social protection, public works, cash transfers, Ethiopia, PSNP |
| JEL: | I38 O13 Q15 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:unl:novafr:wp2003&r=all |
| By: | Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi |
| Abstract: | We examine the effects of China's industrial clustering on resource reallocation efficiency across firms. Based on our county-industry level DBI index panel, we find that industrial clustering significantly increases local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters facilitate higher entry rates and exit rates; and (ii) within clusters' environment the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. The identification issues are carefully addressed by instrumental variable (IV) regressions. |
| Keywords: | Competition; Industrial Cluster; Productivity Growth; Resource reallocation |
| JEL: | D2 H7 L1 O1 R1 R3 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14506&r=all |
| By: | Michael D. König (Vrije Universiteit Amsterdam, School of Business and Economics); Kjetil Storesletten (Department of Economics, University of Oslo); Zheng Song (Chinese University of Hong Kong, Department of Economics); Fabrizio Zilibotti (Cowles Foundation, Yale University) |
| Abstract: | We construct a model of rm dynamics with heterogenous productivity and distortions. The productivity distribution evolves endogenously as the result of the decisions of ï¬ rms seeking to upgrade their productivity over time. Firms can adopt two strategies toward that end: imitation and innovation. The theory bears predictions about the evolution of the productivity distribution. We structurally estimate the stationary state of the dynamic model targeting moments of the empirical distribution of R&D and TFP growth in China during the period 2007-2012. The estimated model ts the Chinese data well. We compare the estimates with those obtained using data for Taiwan and ï¬ nd the results to be robust. We perform counterfactuals to study the effect of alternative policies. We ï¬ nd large effects of R&D misallocation on long-run growth. |
| Keywords: | China, Imitation, Innovation, Misallocation, Productivity, R&D, Subsidies, Taiwan, TFP Growth, Traveling Wave |
| JEL: | O31 O33 O47 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2237&r=all |
| By: | Bastien Dufau |
| Abstract: | Difficulties to adopt an international price of carbon has highlighted one of the most important objectives of countries: preserve their industries’ competitiveness. This article follows this idea and aims to evaluate the multisectoral and international impact of an energy shock. More precisely, the focus is made on a carbon tax and its impact on unit cost of production. In this article, the focus is made on a way to go through the limits of the input-output analysis by endogenizing technical coefficients. Using a flexible cost function permits to remove the non-substitution hypothesis and allows all sectors to optimize their demand of inputs. We use a Generalized Leontief (LG) implicit cost function in our input-output model. We show that this implicit cost function matches with the price input-output model in physical data. Finally, we study the impact of a carbon tax (40€/tCO2 or 80€/tCO2) at a European level. A cost competitiveness analysis shows that Poland would be mainly impacted by the tax, unlike the other European countries that maintain their competitiveness at the international level at the lower rate of tax. A strong heterogeneity among countries and industries stresses the necessity to focus negotiations on the recycling of the product of the tax. Then we compare the impact of the tax in France and in Germany and find a little impact on France’s competitiveness contrary to Germany. Nevertheless, if the tax is adopted at the European level, the French Manufacturing sector would be more impacted by the indirect effect of the tax through intermediate consumption. |
| Keywords: | Input-Output analysis, Competitiveness, Carbon tax, Multisectoral analysis, Energy, Flexibles functional forms |
| JEL: | D24 D57 F20 H23 L00 Q4 Q5 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:cec:wpaper:2005&r=all |
| By: | Corinne Autant-Bernard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Ruben Fotso (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Nadine Massard (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Large firms dominate R&D investment in most countries and receive the majority of public R&D funding. Due to methodological difficulties, however, evaluation of the effect of government-sponsored R&D programmes mainly focuses on small-and medium-sized enterprises. The scarcity of large firms and their heterogeneity hampers the ability to find proper counterfactuals for very large companies and makes it difficult to use proper inference methods to measure the impact of a specific policy. In order to address these methodological issues, we propose using the synthetic control method, initially developed by Abadie et al. (2010) to evaluate programmes on a regional scale. We apply this method to evaluate the impact of a new French science-industry transfer initiative and compare the results with the random trend model and more standard counterfactual approaches. Based on data covering a long pre-treatment period (1998-2011) and ongoing treatment period (2012-2015), we reveal a convergence between the results obtained with the synthetic control method and the random trend model, and demonstrate that traditional counterfactual evaluation methods are not appropriate for large firms. Moreover, the synthetic control method has the advantage of providing an individual assessment of the policy impact on each firm. In the specific case of the French science-industry transfer initiative, it reveals that the impact on private R&D is highly heterogenous both on RD inputs and cooperation behaviours. Beyond this specific transfer policy, this study suggests that the synthetic control method opens new research perspectives in policy impact evaluation at the firm level. Abstract: Large firms dominate R&D investment in most countries and receive the majority of public R&D funding. Due to methodological difficulties, however, evaluation of the effect of government-sponsored R&D programmes mainly focuses on small-and medium-sized enterprises. The scarcity of large firms and their heterogeneity hampers the ability to find proper counterfactuals for very large companies and makes it difficult to use proper inference methods to measure the impact of a specific policy. In order to address these methodological issues, we propose using the synthetic control method, initially developed by Abadie et al. (2010) to evaluate programmes on a regional scale. We apply this method to evaluate the impact of a new French science-industry transfer initiative and compare the results with the random trend model and more standard counterfactual approaches. Based on data covering a long pre-treatment period (1998-2011) and ongoing treatment period (2012-2015), we reveal a convergence between the results obtained with the synthetic control method and the random trend model, and demonstrate that traditional counterfactual evaluation methods are not appropriate for large firms. Moreover, the synthetic control method has the advantage of providing an individual assessment of the policy impact on each firm. In the specific case of the French science-industry transfer initiative, it reveals that the impact on private R&D is highly heterogenous both on RD inputs and cooperation behaviours. Beyond this specific transfer policy, this study suggests that the synthetic control method opens new research perspectives in policy impact evaluation at the firm level. |
| Keywords: | impact evaluation,R&D policy,large firms,synthetic control method,Technological Research Institutes (TRIs) |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02733210&r=all |